What we know

So while we've been in the subprime car loan business for over two decades, we still can't answer this question although we can understand the frustration this causes.

That because while high-risk lenders do take credit scores into account, they also look past these scores by considering an applicant's income, bills, job and residence stability as well as payment-to-income and the loan-to-value of the particular vehicle the buyer wants to finance.

LendingTree Study

But still, an overall view of lending is possible, and the online loan marketplace LendingTree just completed a year-long study of over 20,000 loan offers made by lenders to a broad spectrum of borrowers.

Here's what the study found:

Qualified borrowers with "good" credit scores, considered to be between 700 and 779, received loan offers with an average APR of 5.14% on a 60-month loan.

Consumers just one credit band lower, with a "fair" credit rating, ranging from 620 to 699, received loan offers with an APR averaging 77% higher than that of borrowers with "good" credit, at 9.08% for a 60-month loan.

The average credit score of borrowers who requested a 60-month loan for a new 2014 vehicle was 660.

"The impact of credit score on the cost of the loan over time can be substantial and, given the current historically low rate environment, the differences are even more striking for credit-challenged consumers," said Rick Finch, SVP and General Manager of LendingTree Autos. "Awareness of your credit score, how it impacts your rate and the steps you can take to improve it over time are key. There is no easy fix for a low credit score, but with time and patience the effort is well worth the savings and peace of mind."

Tips on Lowering the Cost of Borrowing

Although credit-challenged consumers have to contend with higher than normal interest rates, there are still ways even these buyers can lower the cost of borrowing including:

Make a large down payment. This reduces the interest charges by lowering the amount financed.

Pick the shortest loan term possible. Doing this can have a big impact on the interest charges of any loan

Choose an affordable vehicle. Put off buying that dream car until after your credit profile has improved.

The Bottom Line

Although no one can predict what a particular credit-challenged individual's car loan interest rate will be before their application is reviewed by both a dealership special finance manager and lender, the information from LendingTree can serve as a rough guide as to what they might be able to expect.

One more tip: at Auto Credit Express we specialize in helping people with credit issues find dealers that can offer them their best chances for approval on bad credit auto loans.

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